Economic growth slowed in year-on-year terms in January-July. The headline figure was pulled down by a contraction in oil production at the Azeri-Chirag-Guneshli (ACG) field. A weakening of private consumption-owing to slower real wage growth, a slowdown in consumer lending and a tightening of fiscal policy-also resulted in slower growth in the non-oil sector. We have recently revised down our growth forecast for 2014-15 to reflect our view that the non-oil sector, which has been the main driver of growth since 2010, will perform more weakly than originally projected.

Real GDP grew by 2.4% year on year in the first seven months of 2014, compared with 5% in the equivalent period of 2013, according to the latest data from the State Statistics Committee (SSC). The headline growth figure continued to be pulled down by the performance of the oil sector, which accounts for around 45% of GDP and which contracted by 3.1% year on year in the first half.

Total oil output stood at 21.2m tonnes in January-July, a contraction of 2.2% year on year. The year-on-year decrease has been driven by weaker output at the ACG field, which is the largest oil-producing field in the country and accounts for around 80% of total production. Oil output from the ACG oilfield stood at 656,000 barrels/day in the first half of 2014, down by 2.4% year on year. Oil output has been affected by BP's plans to shut down one of the platforms at the ACG project for several weeks later in the year for maintenance work. 

Oil output will recover moderately in the second half following the conclusion of the works. Nevertheless, we expect annual production in 2014 to fall by just under 2%.

(Economist Intelligence Unit)

Bakudaily.Az